Broadcom has the opportunity to reset the narrative with its third-quarter earnings on Wednesday afternoon after a tumultuous three months for the stock. Though Wall Street analysts expect around 70% earnings growth this year and next, the stock is down 30% from its all-time high in June.

Broadcom is a key beneficiary of the artificial-intelligence data center investment boom with hundreds of billions of dollars being spent this year, and more expected next year. Broadcom designs AI chips for customers like Alphabet, Meta Platforms and OpenAI, with Google Cloud being its largest and oldest customer.

Wall Street analysts expect third-quarter sales of $29.2 billion, up 83% from a year ago, on the back of a 121% rise in semiconductor revenue, and a 30% boost to the software segment. Adjusted earnings per share are projected to grow 90% to $3.22.

The stock's decline began with last quarter's earnings report. The company just edged out expectations, but guidance for AI-chip sales disappointed. In particular, investors were expecting the company to raise its $100 billion 2027 outlook and it held firm instead. The 13% decline the next day was less about fundamentals than a reset of expectations about a stock that was up 38% on the year, and was trading at a big valuation premium to the S&P 500 index. Today, the stock's price/earnings ratio for next year at 18.9 is just above that of the index, even with the high-growth expectations.

Two new stories also depressed the stock. First came the June announcement of a fund from Apollo and Blackstone to finance a large buildout of data centers deploying Broadcom chips. But the catch came with Broadcom's quarterly filing, which revealed that Broadcom was on the hook for as much as $29 billion in lease obligations should the lessees default. If all the data centers envisioned by the agreement materialize, third-party investments could climb as high as three-quarters of a trillion dollars, so Broadcom's exposure is just a small portion of the chip sales it would have seen in the interim. But still, this got tagged as "circular financing," lending doubt to the demand story.

Finally, in August, Broadcom's best AI customer, Google, signed a deal with Marvell to design other chips in Google's AI infrastructure. In April, Broadcom extended its deal with Google for the TPU, the main chip in Google's bespoke data centers which Broadcom has partnered on for over a decade. But now another company will be providing other chips, reducing a potential source of future sales of less expensive silicon.

There's a lot of pressure on third-quarter earnings to turn the narrative back around.